Digital Garage, Inc.
- Second Quarter FYE 2011 Financial ReportFebruary 10, 2011

Contents

Mission and Business Model・・・・・・・

3

Group Financial Performance Review

・・・・・・・

6

Second Quarter FYE 2011 Segment Performance Review

・・・・・・・ 14

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Mission & Business Model

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

DG’s Mission
context company

Context Company
Digital Garage creates innovative
business “context” for the new internet
age and provides unique businesssolutions for Japan’s new lifestyles,
society and industries by linking:

Real &
Local &
Marketing &Present &
-4-

Cyber
International
Technology
FutureCopyright © 2011 Digital Garage, Inc. All Rights Reserved

DG’s Business Modelcontext company

Produce and incubate Japan’s Internet businesses
with optimal use of our three core strengths: IT, MT and FT★ Information Technology

IT★ Marketing Technology

MT

FT★ Financial Technology-5-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Group Financial Performance Review

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Executive Summary
context company

Shift Toward Social Media Business- Growing Hybrid Solution Providing Foundation for
Accelerated Social Media Incubation -Ⅰ

Group performance exceeding revenue forecasts- Advancement of ToB solution/settlement business restructuring led to strong
performance- Investment capital gains achieved

Ⅱ

Increased media power and progress in monetization- Domestic Twitter UUs exceeding 12 million (Source: NetRatings Japan Inc.)- Number of advertising impressions temporarily decreased due to website renewal- Restructuring of mobile businesses implemented with launch of e-book business- Preparation of new smartphone businesses for growing Android market currently
under wayⅢ

Reinforced efforts in new social media cultivation- Investment/business partnership for new social media platforms implemented- New projects (e.g., business SNS) under review-7-

Copyright © 2011 Digital Garage, Inc. All Rights ReservedPerformance Summary (Consolidated)
context company(¥ million)

Cumulative
Q2 FYE 2010
ActualInitialForecast

Dec. 27
Forecast

Net sales

3,854

4,500

Operatingincome-443

Ordinary
incomeNet income

Actual-to-Forecast(Amount)

CumulativeQ2 FYE 2011

Year-on-Year(Amount)

ActualInitialForecast

Dec. 27
Forecast

4,950

4,983

+483

+33

+1,128

-490

-240

-181

+308

+58

+ 262

-261

-205

170

213

+418

+43

+ 475

-247

-230

130

158

+388

+28

+ 405

Cumulative Q2 FYE 2011 Performance
Surplus of ordinary income (Q1) and operating income (Q2)
■ Sales up 29.3% year-on-year; operating income up 262 million yen year-on-year■ Ordinary income included equity in earnings of affiliates (Kakaku.com, etc.) of 413 million yen
as non-operating income; up 475 million yen year-on-year(213 million yen in 2011 vs. -261 million yen in 2010)■ Q2 net income up 405 million yen year-on-year(158 million yen in 2011 vs. -247 million yen in 2010)-8-

Copyright © 2011 Digital Garage, Inc. All Rights ReservedQuarterly Comparisons of Consolidated
context company

Consolidated Net sales/Ordinary income
Net sales(¥ million)

Ordinary income

3,000

2,500

1,961

2,000 1,893

2,067

178

200

2,747

150

2,425
2,237

100

36

50
0

1,500

-50

1,000

-82

-100
500

-150

0

-139

-122 -113

-200
1Q

2Q

3Q

2010.6

4Q

1Q

2Q

1Q

2011.6

2Q

3Q

2010.6

-9-

4Q

1Q

2Q

2011.6

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Segment for 2Q FYE 2011 (Consolidated)
context company(¥ million)

Q2 FYE 2010
(Actual)Q2 FYE 2011
(Actual)Year-on-Year(Amount)（ Hybrid Solution Segment ）Net sales

3,503

4,389

+885

Operatingincome

84

298

+214

（ Media Incubation Segment ）Net sales

343

353

+9

Operatingincome

△74

△120

△45

（ Venture Incubation Segment ）Net sales

7

240

+232

Operatingincome

△54

146

+200

* Operating income: based on figures prior to Group tax deduction-10-

Copyright © 2011 Digital Garage, Inc. All Rights ReservedQuarterly Comparisons of Consolidated Segment
context company

Hybrid Solution
Net sales(¥ million)

Operating income
210

3,000

191

190

2,384

2,500

2,187

1,836
2,000
1,738 1,765

170
150

2,005

130

107

110
1,500

90

68

70

1,000

50

51
32

30

500

10
-10

0

Q1

Q2

Q3

2010.6

Q4

Q1

Q1

Q2

2011.6

Q2

-2
Q3

Q4

2010.6Q5

Q6

2011.6

Performance Review- Solution:
expansion of businesses with increasing returns contributed to income growth- Settlement: growth of existing businesses achieved; new business launched-11-

Copyright © 2011 Digital Garage, Inc. All Rights ReservedQuarterly Comparisons of Consolidated Segment
context company

Media Incubation
Net sales(¥ million)
250

230

237

Operating income
0

231

-10

188

200

-20

-19

-13

-30

155
150

-40

122

-35

-36

-39

-50
100

-60
-70

50

-80

-84

-90

0

Q1

Q2

Q3

2010.6

Q4

Q1

Q1

Q2

2011.6

Q2

Q3

2010.6

Q4

Q1

Q2

2011.6

Performance Review- Restructuring of mobile businesses implemented with launch of e-book business; existing content distribution
to be discontinued in Q3; preparation of new smartphone businesses for growing Android market under way- Number of advertising impressions temporarily decreased due to Twitter website renewal-12-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Financial Summary for 2Q FYE 2010: BS (Consolidated)
context company

FYE 2010
ActualQ2 FYE 2011
ActualYear-on-Year(Amount)

Current assets

14,20814,220+11

Incl. cash anddeposits

4,799

5,055

+255

Incl. receivables

3,413

4,000

+587

Money held in trust

3,155

2,253

-902

5,497

+316

(¥ million)

Total assets

19,706

5,813
20,034Current debt

9,941

10,283+342

Fixed debt

935

753

-181

Incl. deposits

5,743

6,687

+944

Incl. interest-bearing
debt

3,479

3,069

-410

8,829

8,997

+167

19,706

20,034+327

Fixed assets

Net assets
Total debt/net assets

-13-

+327

Settlement-related accounts
Receivables:
Payments owed byconvenience stores/credit
card companies(average payment period:
approx. two weeks)
Money held in trust:Payments protected bytrust

Deposits:
Payments temporarily held
until paid to e-commerceclients

Copyright © 2011 Digital Garage, Inc. All Rights ReservedConsolidated Performance Forecast for FYE 2011
context company

FYE 2010

Cumulative
Q2 FYE 2011

FYE 2011

Year-on-Year

ActualInitialForecast

ActualInitialForecast

Net sales

8,346

4,500

4,983

10,600+2,254

Operatingincome

-960

-490

-181

-250

+710

Ordinary
income

-457

-205

213

500

+957

Net income-2,207

-230

158

310

+2,517(¥ million)(Amount)

Performance Forecast for FYE 2011
Overall forecast remains unchanged despite Q2 cumulative performance exceeding initial expectations■ Q2 cumulative performance exceeded initial forecasts■ Hybrid Solution:

steady growth expected to be maintained■ Media incubation:

forecast figures of Twitter related ad returns and start-up losses for new businesses
currently being analyzed■ Venture incubation: positive year-end results achievable thanks to robust overseas private equity market-14-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Second Quarter FYE 2011
Segment Performance Review

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Business Segment
context company

Ⅰ

Venture Incubation Segment- Silicon Valley-type hands-on incubation (import)- Support of Japanese startups targeting at overseas market (export)

Ⅱ

Media Incubation Segment

Media Incubation- Develop new next-generation social media

Ⅲ

VentureIncubation

Hybrid Solution Segment

Hybrid Solution- Departure from existing commissionedtype Integration and Settlement business-16-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Venture
Incubation

Media Incubation

Hybrid Solution

I

Venture Incubation Segment➤ DG Incubation, Inc.
Venture business incubation through investment and development➤ Open Network Lab
Internet-based business accelerator program for aspiring engineers

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Business Overview: Venture Incubation Segment
context company

Ⅰ

Venture Incubation Segment
Increase-basedIncreasedomestic/overseas
domestic/overseasinvestments
investmentsfor
forsocialsocialmedia
media-based
businessbusinessincubation
incubation

DG
DGIncubation,
Incubation,Inc.:
Inc.:
Actively
Activelycollaborate
collaboratewith
withrenowned
renownedinvestors
investorsprimarily
primarilybased
basedininSilicon
SiliconValley
ValleyandandSingapore;
Singapore;invest
investinin
nextnextkey
keysocialsocialmedia
mediathat
thatfollows
followssuccesssuccessofofTwitter;
Twitter;provide
provideongoingongoingsupport
supportfor
forJapaneseJapanesemarket
marketlocalization
localization

DG
DGStrategic
StrategicPartners:
Partners:
Initiated
Initiatedcapital
capitalparticipation
participationinincontent
contentdistributor
distributorMediaMediaDo
DoCo.,
Co.,Ltd.
Ltd.ininresponse
responsetotoexpansion
expansionofof
e-booke-bookmarket;
market;incubation
incubationprojects
projectsfor
forsocialsocialmedia-based
media-basedbusinesses
businessesplannedplannedOpen
OpenNetwork
NetworkLab:
Lab:
SecondSecondroundroundofof“Seed“SeedAccelerator”
Accelerator”program,
program,which
whichsupports
supportsentrepreneurial
entrepreneurialengineers
engineerswho
whocreatecreateglobalbusinesses
originating
fromJapan,
attracted
more
entriesfromaround
the
world
than
the
global businesses originating from Japan, attracted more entries from around the world than thefirst
firstround;
four
selected
teams
arecurrently
developing
products
withthesupportoftheLab;
resultsareround; four selected teams are currently developing products with the support of the Lab; results arescheduledscheduledtotobe
beannounced
announcedininApril
April
Consolidated companies

Investment ratio

Description

Jun 09/Jun 09

100%

Foreign investment and domestic
business development➤ DG Strategic Partners, Inc.Oct 10/Oct 10

100%

Domestic direct investment➤ DG Incubation, Inc.

Establishment/Subsidiary dates-18-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Venture Incubation Business Strategy
context company

Create global standard originating from Japan while incubating overseas VCs based
primarily in Silicon Valley area
Import/export of Internet businesses
New venture incubation in the era of real-time web
U.S. origin WEB 2.0 - real time WEB- From Silicon Valley -Japan origin global standard- From Tokyo, JAPAN - Enhance business-type investment primarily in
Silicon Valley companies
 Investment in overseas companies andlocalization in Japan

 Support domestic venture creation by opening ON
Lab site Collaborate with Singaporean government and funds

Import model

Export model

IPO

Ⅰ
Overseas venture investment

Ⅱ Startup business

+

Later
Early

Ⅲ

Business investment

Seed

VC investment primarily in U.S. andJapanese market entry support

incubation program

Singapore- Partnership with government- Fund investment

New domestic venture incubation andoverseas market entry support-19-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Recent Investment Highlights
context company

Business alliance with key e-book industry player
Media Do as largest external investor (approx. 15%)

Emerging SNS with 2 million postings sinceNovember 2010 launch

Aggressive promotion of e-book reader platform
with multi device support for smartphone market- Founded by former Facebook Senior Platform Manager
David Morin and Napster founder Shawn Fanning- Established as a key industry figure by attracting
investment from major businesses- Personal network service that offers private alternative topopular social media such as Twitter and Facebook(e.g., DG, CCC and Shogakukan)- Collaborated with top mobile carriers(e.g., DoCoMo, Softbank)

Digital content brokerage

Other major
printing businesses

E-book stores
NTT DoCoMo
Softbank
etc.

Download

Approx. 50,000 titles offered
as result of capital allianceagreements with Kodansha,
Shogakukan and CCC

Publishing/book distribution

User
-20-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Venture
Incubation

Media Incubation

Hybrid Solution

II

Media Incubation <B2C businesses>➤ Twitter Company
Operational support and business development for Twitter in Japan

Twitter company➤ CGM Marketing, Inc.
Twitter- and CGM-based ad product development, twinavi operation and Twitter business support➤ Wheel, Inc.
Contents providing service for smartphones utilizing social media

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Business Overview: Media Incubation Segment
context company

Ⅱ

Media Incubation / B2C Businesses
SocialSocialmedia
mediaincubation:
incubation:New
Newpost-Twitter
post-Twittersocialsocialmedia
mediaprojectprojectand
andstrategic
strategicbusinesses
businessesforsmartphonemarketbeing
prepared
for smartphone market being prepared◆ Japan‘s Twitter users reached 12.9 million mark in December; established as one of Japan’s most powerful◆ Japan‘s Twitter users reached 12.9 million mark in December; established as one of Japan’s most powerful

media
media

(Source: NetRatings Japan, Inc.)(Source: NetRatings Japan, Inc.)◆ Number of advertising impressions temporarily decreased due to user interface renewal of Twitter site, in mid◆ Number of advertising impressions temporarily decreased due to user interface renewal of Twitter site, in mid-

September
Septemberdespite
despitesteadysteadyprogress
progressininTwitter
Twittermonetization
monetizationimplemented
implementedby
byCGM
CGMMarketing
Marketing◆ In addition to business alliance with HootSuite and investment in Path, new post-Twitter social media business◆ In addition to business alliance with HootSuite and investment in Path, new post-Twitter social media businesscurrently
currentlybeing
beingpreparedpreparedby
bySocial
SocialMediaMediaPlanning
PlanningOffice
OfficeandandDG’s
DG’snewly-launched
newly-launchedstrategic
strategicbusinessbusinessentity
entityWheel
Wheel

DG Mobile operation to be suspended in Q3 due to restructuring implemented with launch of e-book business
DG Mobile operation to be suspended in Q3 due to restructuring implemented with launch of e-book business

Consolidated companies

Establishment/Subsidiary
dates➤Twitter Company

Investment ratio

Description

Nov 09Group
company

Operational support for mini-blog service Twitterin Japan➤CGM Marketing, Inc.

Aug 06/Aug 06

74%

Drive forward marketing businesses using
blogs and Twitter➤ Wheel, Inc.

Dec 11/Dec 11

100%Social media-based content distribution for
smartphones

20.2%

Price comparison website "Kakaku.com"

Equity-method affiliate FYE 2010 -➤Kakaku.com, Inc.

Dec 97/Jun 02-22-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Progress in Twitter-Related Businesses
context company

Bilateral operation of Twitter: official Twitter and navigation site/third-party Twitter businesses
Establishment of Twitter's business ecosystem in Japan

Business focus shifting from user cultivation to revenue increase
Advertising potential strengthened thanks to

Ⅰ -1 Twitter's high popularity
Twitter, Inc.

- Banner size/unit price under review (x1.5)- Phased introduction of new ad menu to Japanese market underreview

Twittercompany

Growth in number of business users resulted

Ⅰ -2 in increase of promotional campaigns
Strategic Partner

Increase use of Twitter-tie-up campaigns increased
actively used as operation support/impact analysis
tools, following increase in promotional campaigns
to be offered as ToB service platform- Official Twitter site
operation support- Advertising monetization
for computers/mobile
devicesOngoing multifaceted development of third-party

Ⅱ businesses
DG profit increase- Application businesses co-launched with major content
providersThird-party entity- Fee-based content distribution services for smartphones
currently being prepared-23-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Highlights and Forecasts: Twitter Company
context company

Twitter company (Digital Garage Twitter company)

Twitter use for NHK's annual music show
(Kohaku Uta Gassen)

FYE 2011 Mid-Year Highlights◆ Extensive website renewal implemented on September 15
New interface allows users to attain external information without leaving
Twitter site; new advertising products using renewed interface currently
being tested in U.S. to be implemented in Japan◆ Twitter becoming essential part of social infrastructure
Increased collaborations with Internet and mass media; participated in
global broadcasting of NHK Kohaku Uta Gassen on New Year's Eve◆ User base expansion (Source: NetRatings Japan, Inc.)
I-appli launched via NTT DoCoMo Market (December 16)

Rapid increase of official users:- PC-based UUs: annual growth of approx. 270%
(from 4.73 million in January to 12.9 million in December)- Mobile-based UUs: annual growth of approx. 830%

◆ Activity improvement
New world record for TPS (Tweets Per Second): 6,939 TPS between
New Year's Eve and New Year's Day, breaking previous record of 3,283
TPS during last World Cup

Further expansion of Twitter usage and profit improvement
MidMid- andand longlongterm
term strategy
strategy- Shift from marketing and expansion phase to fully-fledged monetization phase- Localization of U.S. advertising products and development support of products
unique to Japanese market-24-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Recent Twitter Highlights
context company

Number of visitors

Website Renewal Overview

Twitter UUs reach 12.9 million mark in December

Extensive renewal launched on September 15, 2010

➤ Number of visitors: mixi, Twitter and Facebook(Unit: 1,000)

Detail pane appearson the right side whena tweet is clicked

Jan

Mar

May

Jul

Sep

iTune-linked Ping allows users tocheck and preview songs andalbums without leaving Twitter site

Nov
(Unit: 1,000)

Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

Detail pane displays various
services including:

New advertising products currently being tested in U.S.
◆ Promoted Tweet
Advertisers’ tweets are displayed at
the top of the search results page
◆ Promoted Trend
Trend tied with certain
keywords is displayed◆ Promoted AccountAdvertisers’ accounts are suggested
to users who follow similar products-25-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Highlights and Forecasts: CGM Marketing, Inc.
context company

CGM Marketing, Inc.
FYE 2011 Mid-Year Highlights

Facilitation of enterprise/personal usage of widewide-ranging Twitter services and ongoing Twitter monetization
Twitter official PC/mobile-based advertising business◆ Modified banner size for enhanced advertising impact and increased advertising fee with introduction of new user interface◆ Mobile-based advertising in new format launched in August; preparation of new menu for PC-based advertising currently
under way

◆ Corporate use of Twitter well-established; needs for ToB services increased- Twinavi registered businesses:

approx. 6,500 accounts- Management/marketing support ASP tool Tweetmanager: approx. 70 accounts (cumulative)- Community site for corporate Twitter accountadministrators twilabo (launched in October 2010):

approx. 200 accounts◆ Expanded ToC services (e.g., follower search tool Tree, dress-up tool for profile pictures)
while engaged in further enhancement of service quality and UU increase throughpartnership with top entertainment content distributers (e.g., PIA, Avex)

New ToB service development and reinforcement of ToC services
MidMid- andand longlongterm
term strategy
strategy- Facilitate corporate use of Twitter with focus on twilabo and accelerate new service usage- Promote twinavi as social platform and examine introduction of potential ToC profit model-26-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Highlights and Forecasts: Mobile-Related Businesses
context company

Wheel, Inc.
FYE 2011 Mid-Year Highlights◆ Restructuring of mobile businesses implemented following investment agreement with e-book

distributer Media Do:
DG's existing official website businesses for mobile devices (e-books and videos) reorganized following recent
expansion of e-book market◆ Shift in business focus toward new smartphone-specific services:

New business development under way in response to widespread use of Android mobile phones- Social media platform services including Twitter- Fee-based content distribution services (photos, videos, e-books, etc.)

Followers

DG's smartphone app combining
Twitter client services and content distributions

Content store(via PC, mobile phones, Android phones, iPhones,
iPads, etc.)

Turning followers toservice users

Twitter
Users

Smartphone- and social media-based service provider
MidMid- andand longlongterm
term strategy
strategy- Link businesses to DG-related social media services including Twitter- Develop services for smart devices such as smartphones, tablet terminals andTV media devices*1 Source: goo Research survey (Jan. 20, 2010)-27-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Venture
Incubation
Media Incubation

Hybrid Solution

III

Hybrid Solution: B2B Solution businesses➤ DG&Ibex Company
Marketing promotion support, media development and web solutions➤ e-context Company
E-commerce settlement platforms

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Business Overview: Hybrid Solutions Segment
context company

Ⅲ

Hybrid Solution / B2B Solution Businesses
SteadySteadyprogress
progressof
ofHybrid
HybridSolution
SolutionPartner
Partnerbusinesses
businesses

Solutions:
Solutions: ConsistentConsistentprogress
progressininmedia
mediabusinesses
businesseswith
withincreasing
increasingreturns
returnsininaddition
addition
totoexisting
existingcommissioned
commissionedbusinesses
businessescontributed
contributedtotostronger
strongerrevenue
revenuebase
base(e.g.,(e.g.,point
pointmall,mall,BirdFish,
BirdFish,etc.)
etc.)
Settlement:
Settlement:Transactions
Transactionsusing
usingnew
new“worry-free”“worry-free”settlement
settlementservice
serviceco-launchedco-launchedwith
withKakaku.com,
Kakaku.com,show
showsteadysteadyincrease
increaseas
aswithwithexisting
existing
settlement
settlementservices
services

Consolidated companies➤ Digital Garage

Establishment/Subsidiary dates

Description

Aug 95

Group holding➤e-context Company

May 00/Oct 08 merged with DG

E-commerce settlement service/logistics
platform provider➤DG&Ibex Company

Sep 83/Oct 08 merged with DG

Next-generation solution provider forsale-focused business-29-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Business Overview: Hybrid Solution Segment
context company

Strong performance under new framework as result of advancement of
B2B solution/settlement business restructuring
Facilitate acceleration of business growth by assigning specific business/hybrid solution areas for each entity

DG&Ibex Company
Marketingsolutionse-context Company
Hybrid Solution Strategy Office
Settlement
Hybrid projects linking DG& Ibex
and e-context

Hybrid Solution
Strategy OfficeMarket share cultivation for media
businesses with increasing returns
and enhancement of existing
solution services

・Commerce affiliate project・Smartphone settlement project・Business applications project-30-

Expansion of existing services(e-commerce and gaming devices)and launch of “worry-free”
settlement service

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Highlights and Forecasts: DG&Ibex Company
context company(Digital Garage DG&Ibex Company)

FYE 2011 Mid-Year Highlights◆ Strong growth of existing commissioned businesses:

Apply DG’s strength and expertise in social media as key factors of differentiation strategy andincrease sales by integrating with existing servicesÂComprehensive promotion: addition of new major clients resulted in strong sales (131% year-on-year)ÂWeb marketing: recovery of financial/recruitment markets resulted in strong increase (159% year-on-year)
Value of mall transactions and number of vendor contracts
Number of websites(semiannual data)
10,000(¥million)
10,000◆ Transition to media-/hybrid solution-focused businesses

Successful cultivation of businesses with increasing returns
for increased revenues

12

9,000
10

8,000
7,000

6,736

8

6,000

ÂPoint Mall services: significant increase in value of transactions
6,736 million yen (202% year-on-year)ÂOctober: full-scale launch of

6

5,000
4,182

4,000
3,327

4

3,000
2,000

1,592

2

1,018

1,000

631
287

DG&Ibex

0

0
07/12

08/6

08/12

09/6

09/12

10/06

10/12

11/06予forecast

Full-fledged operational phase as Hybrid Solution Partner
MidMid- andand longlongterm
term strategy
strategy- Accelerate development of social media-based solution packages for enterprises- Strengthen revenue base by continuously adding media-based services to existingcommissioned businesses-31-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

DG&Ibex Company Update
context company

Point Mall
Development of affiliate malls linked with point programs offeredby business with customer information database

Companies withcustomer databases(e.g., credit card companies)- Mall card memberships increased from approximately 54.65 million to
85.65 million

E-commerce sites(advertisers)

Mall development/operation(DG)

1. Customer①顧客誘導
solicitation

2. Customer②顧客送客
channeling

Point Mall
ポイントモール- Service implemented at nine major credit company websites with two
more sites to be added in second half FYE 2011

3. Managing fees
③運営費

- Transactions expected to jump significantly in second half due to additionof a major client site launched in December 2010,
creating Japan's biggest point mall service

Purchase
購入
1. Contingent fee system①成果報酬費2. Advertising fees
②広告費

Points added based on purchase amount

BirdFish (http://birdfish.jp)
ASP service optimized for intra-firm knowledge sharing using
Twitter-style mini-blog- Fee-based services fully-launched in October:Monthly fee: 100,000 yen (up to 700 users)
200,000 yen (up to 3,000 users)- To be implemented in IIJ GIO Cybozu Garoon SaaS after spring,following formation of business alliance with IIJ's cloud service in January- Currently in trial stage with goal of swiftly reaching 100 fee-based
business clients-32-

Copyright © 2011 Digital Garage, Inc. All Rights Reserved

Highlights and Forecasts: e-context Company
context company

Digital Garage e-context Company

First Half FYE 2011 Actual
Number of affiliated websites

Number of transactions

Total amount of transactions

38,561

7.52 million

55.4 billion yen

126% (year-on-year)

112% (year-on-year)

109% (year-on-year)
Overview

FYE 2011 Mid-Year Highlights
August 2010:

Kakaku.com Settlement Assurance Service co-launchedin November following business alliance agreementwith Kakaku.com

September 2010:

Settlement services for BICCAMERA Inc. launched
Payments via convenience store and Internet banking
on biccamera.com increased

Other:

Gaming fee revenue increased (e.g., Online Monster
Hunter Frontier XBOX launched on June 24, PlayStation
Network Tickets)
Launch of “Kakaku.com worry-free” settlement service
Goal: 100 corporate clients withapprox. 20% of transaction market
share gained by June-33-

Â Transactions increased due to ecommerce and digital content market
expansionÂ Ongoing focus from previous year on
credit card data processing services
showing growth with over 1 million
pieces of data processed monthly

Future focus areas
Â Enhance safe and secure environmentfor Internet shopping based on
Kakaku.com Settlement Assurance
ServiceÂ Develop new settlement service forsmartphones

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Please note that the business forecasts and strategies covered in this material are based on our current evaluationand future results may vary significantly depending on unforeseeable events or circumstances.